Tag Archives: Financial planning

Post navigation

Few understand the power of the investment allocation model, even in – especially in – times of crisis; but the power can be great when tied to a long-range financial plan.

iStock Images

Jim Lorenzen, CFP®, AIF®

I can almost guarantee that not many people fully realize the power of an investment model as a means to fulfill a long-range financial plan, even in – or especially in – times of crisis.

The chances of a V-shaped recovery appear to be slim; not just because of the chances of a new spike in the pandemic due to possible premature reopening of the economy, it’s more about how market recoveries generally occur; yet, the power of the investment model remains unknown to many.

Many people intuitively believe that a 20% loss can be recaptured with a 20% gain; but, of course it’s not true. If you start out with $100, a 20% loss takes you down to $80. But, to get back to $100, you need to see your $80 grow by 25% ($20 ÷ $80). So, knowing that it takes a 25% gain to buy back a 20% loss, it’s easy to see why recoveries generally take longer than the original decline.

When we suffer declines in the market, it can be tempting for some people to sell on the way down in an attempt to cut their losses. The problem, of course is that calling the ‘bottom’ is difficult, because recoveries seldom occur in a straight line. Next thing they know, the recovery happened and they missed the rebound forcing them to buy back in at a new high. As you can see from this chart, a simple buy-and-hold philosophy would have been much easier without forcing them to become a market genius. After all, if Warren Buffett can’t time markets – and he says he can’t – than, why should we try?

That’s where the power of the investment allocation model comes in.

Those who’ve been smart enough to build their financial future with a blueprint tend to have a framework for fulfilling their long-range strategic plan. On the investment side of their planning, the foundation is an customized asset allocation. What few realize is that that allocation has an automatic buy low/sell high mechanism that comes built-in!

Let’s look at a simplified example:

Since we talking about stocks more than bonds, let’s use an example of a simple growth-oriented allocation that’s comprised of 70% stocks and 30% bonds, with the majority of the stocks in the domestic U.S. market (represented here using the S&P index) and a lesser amount in foreign stocks (represented here using a Europe, Asia, and Far East index).

Let’s assume our hypothetical investor has $500,000 invested. To make it simple, basic stock-bond allocation would look like this:

Stocks are now underweighted by 5% and bonds are now overweighted 5%. The great thing about models is that they can, and usually are, rebalanced on some type of schedule or according to some built-in protocol. To get back to our original allocation, money will have to be reallocated from bonds into stocks – the rebalancing ensures that we’re now buying low.

In order to get stocks back to their 70% weighting, we’ll need to bring the stock total to $301,000 ($430,000 x 70%). That will require moving $21,000 from bonds ($301,000 – $280,000). So, our rebalanced allocation is now:

Stocks: $301,000 = 70%Bonds: $129,000 = 30%Total: $430,000 = 100%

Now, over time, the stock market finally recovers the 25% needed to get back to where it was. That 25% gain in stocks adds $75,250 to stock value:

Stocks: $376,250 = 74%Bonds: $129,000 = 26%Total: $505,250 = 100%

Notice, we didn’t just get back to where we were before, we actually made money! We ‘beat the market’? How did that happen? The market returned to where it was but we ended-up ahead!

Rebalancing the investment model allowed us to buy low and sell high without being a market genius!

Now, of course, this is a over-simplified hypothetical (you can’t buy an index and I’ve ignored things like the time-frame involved, taxes, inflation, and a lot of other stuff), but, the concept is no less valid.

Oh, yes, rebalancing again now, getting us back to our original allocation, now means that we’re `selling high’ as the 4% overweighted stock money is now repositioned back to bonds until next time.

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER®professional and An Accredited Investment Fiduciary®in his 21st year of private practice as Founding Principal ofThe Independent Financial Group,a fee-only registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using aproven planning processcoupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author. The Independent Financial Groupdoes not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

I wouldn’t. I also wouldn’t be driving in a strange city without a GPS.

Jim Lorenzen, CFP®, AIF®

It looks like the COVID-19 issue is going to be with us for awhile; the U.S. is still seeing over 25,000 new cases each day and some medical experts think we’re in a two-year process, which makes some sense considering the time it takes to get a vaccine into mass distribution, as well as getting the public to embrace it the way they did the polio vaccine in the 1950s.

Congress, of course, has been passing relief measures which, among some, are raising concerns about the national debt which now stands around at 100% of GDP while unemployment payments in excess of normal wages are creating a disincentive for some Americans to return to work until August, when those benefits are due to expire.

We’e in, of course, an ‘event-driven’ bear market which some would call a structural bear in that it is the result of a government-induced forced shut-down. Given that about 70% of our economy is driven by the consumer and no one knows when they will feel safe enough to work, shop, travel, and go to sporting events (a $12-billion industry) – not to mention the achievement of mass innoculation; some experts believe that the bear could last as long as 42 months.

Whenever economic crisis occurs – and it has on numerous occasions throughout history – the lesson comes home that building a financial house without a blueprint makes for bad construction and a poor outcome. That blueprint, of course, is a financial plan that serves as the foundation for an investment process – and a process is not a group of transactions. Today, of course, those who’ve done it the right way are seeing the value, and the power, of having a model to follow and stay within.

If you have a plan, make sure you keep it updated. If not, maybe it’s time to begin one. If you’d like some help, you can begin your process here.

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER®professional and An Accredited Investment Fiduciary®in his 21st year of private practice as Founding Principal ofThe Independent Financial Group,a fee-only registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using aproven planning processcoupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author. The Independent Financial Groupdoes not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Everyone intuitively understands the need to have a balanced approach to meet retirement needs; however, it’s also important to address risk in light of the long term inflation risk.

Let’s take a hypothetical example using simple numbers. And, suppose after all the data gathering, goal setting, and risk assessments have been completed in the financial planning process, June and Ward Cleaver (yes, I am that old) have decided they feel comfortable with a portfolio that’s comprised of 60% bonds and cash and 40% in stocks.

June and Ward are retiring today after over thirty years of working and saving—they’ve done a lot of thing right—and have accumulated a nest-egg of $1 million. So, in our simple example, that would indicate their money should be arranged with $600,000 allocated to bonds and cash, and $400,000 to stocks. Simple.

But, suppose the two of them also have Social Security income—maybe even pension income, as well. This additional ongoing cash flow shouldn’t be ignored in constructing their allocation. Again, to keep numbers simple (I’m highly qualified for simple numbers). Let’s say Ward and June have an additional $30,000 in annual ongoing income to augment their savings.

What does that $30,000 annual income represent? How much would someone need to have invested to provide the same income?

Assuming a 4% annual withdrawal rate on assets – we’ll say that fits June and Ward’s situation – that $30,000 represents income on an additional $750,000 in assets… except these assets are illiquid: June and Ward can only take the income, they can’t ‘cash in’ the principal. It is like, in effect, an annuity, something some people use to simply ‘purchase’ a lifetime income. I’m not a big proponent, but they do have their place in some situations—but that’s another story.

Nevertheless, if we consider that $30,000 annual income as actually representing an additional asset, June and Ward really effectively have $1,750,000 in assets, $750,000 of which we’ll consider illiquid and providing an income of $30,000 at 4%, but it never runs out of money. If 60% of their total retirement ‘assets’ is to be allocated to bonds, their bond portfolio might now be $1,050,000 (60% of $1,750,000), $750,000 of which is already allocated and providing $30,000 in income.

That leaves $300,000 ($1,050,000 – $750,000) to be allocated to bonds from their nest-egg. This decreases their nest-egg bond and cash allocation from the original $600,000 to $300,000, and therefore raises their stock allocation from $400,000 to $700,000. If long-term inflation is an issue – and it is – then were June and Ward really risking being under-allocated to stocks?

The ‘guaranteed’ $30,000 cash flow, representing an illiquid asset, provides them with the ability, i.e., gives them the freedom, to still address short-term needs and objectives with $300,000, while allowing more money, $700,000) to address long-term inflation risk.

Historically, stocks have performed, simply because they represent the economic engine of the United States. And, it has never made sense to bet against the U.S.A. Pistons drive the engine and the engine provides forward movement.

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER®professional and An Accredited Investment Fiduciary®in his 21st year of private practice as Founding Principal ofThe Independent Financial Group,a fee-only registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using aproven planning processcoupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author. The Independent Financial Groupdoes not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Markets always do; but strategies in the future will have to be different.

iStock Images

Jim Lorenzen, CFP®, AIF®

Maybe. You might think so.

While the S&P was down 10.5% year-to-date as of Friday, it’s still UP 1.1% for the last 12 months while foreign stocks actually lost 13.1%. Who’d a thunk it? And, the real surprise is the NASDAQ index of small stocks, down only 3.3% for the year and actually UP 9.3% for the last 12 months as of Friday’s close[i]. The 10-year Treasury has gained 17.9% as the yield plummeted to just 0.65%[ii].

The core consumer price index (CPI) is holding at 2.1%[iii]; but, as we see huge stimulus spending driving up the debt, the inevitable result may be too much money chasing too few goods and services, thus driving up inflation – an argument to get the economy moving again in order to drive up production while increasing the job numbers and sources of revenue. Debt as a percentage of the GDP will be the key figure to watch.

A key worry is a debt spiral. Treasury secretary Mnuchin is already trying to fund the growing budget deficit – the $2.2 trillion stimulus package is the largest ever passed. John Briggs, head of strategy for the Americas at Natwest Markets, thinks the sheer amount of debt coming is really a war-time sort of funding.

The government has been selling short-term debt (Treasury bills that mature in one year or less) virtually as fast as possible – and more is coming.

The fiscal 2020 deficit – a deficit that needs to be funded somehow – will be four times as large as last year’s $3.8 trillion – almost 19% of GDP, according to the Committee for a Responsible Federal Budget, a non-partisan group. Few on ‘the hill’ see a need for caution right now, given the threat of the virus, but there is little doubt corrective action will be on the horizon.

Economists at JPMorgan Chase & Company say GDP will shrink an annualized 40% in the second quarter, according to a feature in Bloomberg News. That, of course, means a huge amount of debt is coming in the second quarter.

Having a solid formal financial plan with the right allocation is now more important than ever. The markets will come back, but because of the CARES Act and the SECURE Act – and added market volatility – the strategies that used to work are now changing.

Jim

[i] Source: MacroBond Financial AB. S&P 500 is represented by the S&P 500 Index, DJIA is represented by the Dow Jones Industrial Average, NASDAQ is represented by the NASDAQ Composite Index, Foreign Stocks are represented by the MSCI EAFE Index and Emerging Markets are represented by the MSCI Emerging Markets Index. Sectors based on S&P 500 Index sector indexes. You cannot purchase an index.

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER®professional and An Accredited Investment Fiduciary®in his 21st year of private practice as Founding Principal ofThe Independent Financial Group,a fee-only registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using aproven planning processcoupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author. The Independent Financial Groupdoes not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Politicians don’t live under the same health care or retirement systems the rest of us do – so promises, for them, are easy to make.

Fotila Images

Jim Lorenzen, CFP®, AIF®

I’m not sure how many of the candidates who are running on government supported Medicare for everyone majored in economics or finance – it maybe explains the obvious their all-to-obvious failure to address the question directly.

Sen. Elizabeth Warren, for example, promised that it won’t cost the middle class “one penny” – a feat that hasn’t been accomplished by any country now offering universal health care. According to an inciteful Advisor Perspectives article by Rick Kahler, CFP® and registered investment advisor based in Rapid City, S.D., the middle class in those countries pay income taxes of up to 40% and a national sales tax equivalent to 15-25% of income.

While Senator Warren estimates the cost over a decade at $20 trillion in new federal spending – a cost the middle class is somehow to avoid – Estimates from six independent financial organizations put the figure in the $28-36 trillion range.

A Forbes article describes the tax increases aimed at wealthy individuals. Included are:

Eliminating the favorable tax rate on capital gains

Increasing the “Obamacare” tax from 3.8% to 14.8% on investment income over $250,000

Eliminating the step-up in basis for inheritors

Establishing a financial transaction tax of 0.10%

The capital gains tax increase, the step-up in basis, and the financial transaction tax will all affect middle class investors – potentially anyone with a 401(k) or an IRA. Rick Kahler points out that the American Retirement Association estimates that the financial transaction tax alone will cost the average 401(k) and IRA investor over $1,500 a year.

The 0.10% financial transaction tax, for example, would apply to all securities sold and purchased within a mutual fund or ETF, in addition to any purchases and sales of the funds themselves by investors. Mr. Kahler estimates these costs can run 0.20% to 0.30% a year to fund investors. When you consider some index funds charge only 0.10% in total expenses, the increase comes to 200% or more.

Eliminating the step-up in basis and the favorable capital gains treatment will certainly cost middle class investors more than a penny. A retiree leaving an heir $200,000 with $100,000 in cost basis, could easily cost the middle class inheritor $10,000 to $20,000 or more in taxes.

Candidates can promise – that doesn’t cost anything – but it’s the electorate who needs to do the math. After all, our elected representatives don’t live in the same health care world the rest of us do.

Jim

———————————————————————————–

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991. Jim is Founding Principal of The Independent Financial Group. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Risk questionnaires have played a major role in retirement and investment planning for as long as I can remember; and I’ve used them no less religiously than any other advisor. Frankly, I’ve always felt they were a little stupid. Continue reading →

Oops. Now what? No more protection? What happened to all those premium payments? How could you have protected yourself?

Jim Lorenzen, CFP®, AIF®

You’ve been paying on an insurance policy for years. Now, you’ve learned your insurance company – the one that top ratings from all the major ratings services – just went bust – what do you do? What could you have done to protect yourself?

There’s no counter for withdrawals and no ATM – and there’s no FDIC insurance. So, how are you protected?

The insurance industry is regulated state-by-state. Each state maintains its independence and operates its own system of regulation, and each is also a member of the National Association of Insurance Commissioners (NAIC), which helps provide uniformity.

It’s important to understand that an insurer may be based in one state, operate in multiple states, and still be domiciled in another. The domicile state is the lead state under normal circumstances for any regulatory actions.

While insurance companies don’t have any guaranties at the federal level, they do have state-backed insurance guaranty associations. According to Gavin Magor, Senior Financial Analyst for Weiss Ratings and oversees their ratings process, the states have established these associations to help pay claims to policyholders of failed insurance companies. However, there are several cautions which you must be aware of with respect to this coverage:

Most of the guaranty associations do not set aside funds in advance. Rather, states require contributions from other insurance companies after an insolvency occurs.

2.There can be an unacceptably long delay before claims are paid.

Each state has different levels and types of coverage, often governed by legislation. They’re unique to that state and can sometimes conflict with coverage of other states. Moreover, most state guaranty funds will not cover title, surety, credit, mortgage guarantee, or ocean marine insurance.

Bottom line: If an insurer fails, it may be awhile for you to get your claim processed and get your money to fix your home or pay bills. But just how often do insurers fail?

Since Weiss started rating insurance companies in 1989, 633 rated insurers failed. As you can see from the graph below, a majority of them were rated “D” or “E” by Weiss at the time of failure.

Image provided by Weiss

The bottom line is that you can still get your claims paid even after your insurer fails, but it might take a while. So, we recommend you check an insurer’s Weiss safety rating before you start doing business with them. With only a 0.02% chance of an insurer rated “A” or “B” failing in any one year, you can see why we favor those over insurers rated “D” or “E”. In addition to our ratings, be sure to learn more about your insurer’s state guaranty funds.

Never heard of Weiss? I believe it. Virtually all insurers love to tout the other better-known companies; however, there’s a problem: Most, virtually all, of those touted rating services get paid by the insurers they rate! Weiss’ revenue is derived from those companies that subscribe to their reporting – it’s a business model similar to Consumer Reports which doesn’t accept advertising. It should be no surprise that fewer companies receive Weiss’ top ratings. It should also be no surprise that there are some ‘top rated’ companies that won’t allow Weiss to come through their doors.

I’ve encountered some insurance agents – I’ve even met some insurer’s representatives – who look at you with a blank stare when you ask about their Weiss rating. Maybe it’s because some big household names didn’t make the cut.

Worth knowing?

Jim

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and an ACCREDITED INVESTMENT FIDUCIARY® serving private clients since 1991. Jim is Founding Principal of The Independent Financial Group, a registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

So far, tariff-induced inflation simply hasn’t arrived. You’d think if it was going to, it would be here by now. And, the reason is simple: If inflation was in the ‘pipeline’, goods in current inventory would be marked-up in advance in order to raise cash to cover new inventory acquisition costs.

We’ve seen this before. When Mideast oil prices increased, prices at the local gas pumps went up immediately. But, that hasn’t happened with the trade-tariff fears.

Meanwhile, the Fed continues it’s race to the bottom. But, after the most recent cut, the dollar strengthened, making American goods more expensive and reducing demand – opposite the Fed’s intention. Weaker dollars attract foreign capital, increasing exports for American companies; so, the Fed’s losing-streak continues.

Vanguard and Wall Street Journal economists expect inflation to be closer to 2% over the next few years; but, as we know, predictions are one thing, surprises are something else. Inflation has been less than 2% over the past ten years, so it wouldn’t be surprising that the Fed would allow it to run above that number for a period.

For investors, this is where diversification can play a key role. Treasury inflation-protected securities (TIPS) are probably the best and purest form of hedging inflation. Another potential hedge is short-term corporate bonds. This is because if inflation is driven by a strong economy, consumption will increase and profits should be strong; however, it’s important to know what you’re doing: It’s important to understand credit risk – not simply trusting ratings – as well as the average duration of your bond portfolio, as well as how that duration has changed over time.

Of course, bonds can be effective as short-term inflation hedges; but a long-term time frame is another story. Nothing has outperformed stocks and bonds simply haven’t.

Remember, it’s not an either-or proposition. It’s about having a portfolio diversification design that fits your own desires and objectives – and your attitudes about risk. Best to work this out with someone who has seen it all a few hundred times and can help navigate the financial marketplace.

If you don’t know where to find professional help, you can ask your family and friends; you can also consult these resources:

Of course, if you’re not a current IFG client, I hope you will consider checking out the tabs at the top of this page.

Hope this helps,

Jim

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and an ACCREDITED INVESTMENT FIDUCIARY® serving private clients since 1991. Jim is Founding Principal of The Independent Financial Group, a registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

You’ve seen it – you may have even done it yourself: a 25-year-old who has been out of school for several years is beginning to get (somewhat) established in his/her first possible career position (which may likely be one of many before reaching age 35) and looking to enjoy the newly-found independence and early success.

A new SUV, instead of an older one (because of ‘no-down, zero percent financing’, etc.); a nice apartment in a nice area, instead of something smaller; brand-new expensive furniture instead of starting out with second-hand. In short, living month-to-month convinced they haven’t a dollar to spare – because it’s true.

What if a corner was cut here, another there – enough that allowed a savings of just $92 per week – about $400 per month… money that could be diverted to a retirement or other account?

How much would that 25-year old have saved by age 65?

In case you’re wondering, this is me at age 29 in my first apartment after moving to Southern California. A metal folding chair and a swap-meet fold-out sofa (my bed) were my only furniture.

It depends. Let’s assume that s/he simply puts that money into a low-cost, tax-efficient fund or ETF that tracks an index of large company stocks, something like the S&P index (you can’t buy an index, only a fund that tracks it). Historically, long term returns on such an index has been somewhere around 10 percent. But even if the return were 20% less – 8% – our now 65-year-old would have (rounded-off) $1,396,408. Almost $1.4 million!

But, 25-year-olds seldom do this. They wait until they’re age 40 or 50 before they begin to get serious. Problem is, by then $400 per month savings getting the same return by age 65 will have them ending-up with just $380,410…. More than $1 million less!

To catch up and end-up with the same $1,396,408, our 40-year-old needs to save 266% more each month, $1,468.

One might respond, “Yes, but by then I’ll have more money!” True; but, things will cost more, too. Using a long-term 3.5% inflation rate (not unreasonable), that $1,468 the 40-year-old saves has the same purchasing power as $876 has for the 25-year-0ld.

The moral: Start early and increase your deposits as you age. Don’t wait. The biggest gift you can give your children is not their education. Maybe it’s making sure they aren’t faced with additional responsibilities in your old age.

Jim

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and an ACCREDITED INVESTMENT FIDUCIARY® serving private clients since 1991. Jim is Founding Principal of The Independent Financial Group, a registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

There was a time – for those of you old enough to remember – when companies would promise you a pre-determined retirement benefit, then do all the calculations required to figure out just how much they would have to fund your plan in order to achieve the promised results.

Not easy. They had to start with the ending value and work backwards, making capital markets assumptions for expected portfolio returns, based on how their investment portfolio was allocated.

Problems arose, however, when their projections were too optimistic resulting in many under-funded pension plans and an inability to pay promised benefits.

Now you get to decide how much funding is required. Can you calculate the time-value of money? Pensions promised a fixed benefit; but, in the real world, we have inflation and tax-law changes. Pensions never even considered those factors.

Not only do you need to factor-in additional inputs; you also need know how to manage portfolio risk, too! You might find this report somewhat enlightening, if not helpful.

Enjoy,

Jim

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and an ACCREDITED INVESTMENT FIDUCIARY® serving private clients since 1991. Jim is Founding Principal of The Independent Financial Group, a registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.